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Brixton boys make good

Project 73; Thames/ Morrison partnering; The client says: 'We're not looking for hole diggers, we want people who service customers.' The contractor says: 'The whole project is based on what value it can add to the clients' business, not about least cost

It would be hard to imagine a less glamorous demonstration project than number 73, nor one with potentially greater positive impact on the public's perception of civil engineering.

The partnership between Morrison Construction and Thames Water is responsible for the repair, maintenance and extension of the potable water distribution network in South London. The network consists of 9,000km of water mains serving around 2.5M customers: 45,000 jobs are carried out every year.

This welter of statistics, of course, does little to disguise that the work mainly involves plugging leaks, that there is little more irritating to a householder or business than losing your water supply or that a workplace that takes in the bustle of Brixton's Coldharbour Lane and Dulwich's leafy suburbs offers a myriad of challenges.

Project history

The Thames/Morrison partnership dates from 1994. The performance of contractors was damaging the water company's image, while at the same time the utility was having to bear the high cost of a direct labour force. Partnering was chosen as the way forward. A pilot period was successful and a three year framework agreement agreed with Morrison, which was renewed for another five years in 1998.

Procurement

The South London partnership was developed alongside similar arrangements for north London and an area known as 'the provinces', which stretches from Guildford, Oxford and Swindon.

There are three projects in each area - repairs, reinstatement and metering - nine contracts in all.

The idea was to develop a family of contractors, who would, where appropriate, work outside their area's geographical boundaries.

Thames Customer Field Services manager Roger Ford says: 'We broke a few taboos. We suggested to bidders that if they really wanted to work for us they would have to align their organisation to meet our business needs.

'We work in an area which is heavily regulated and this can mean our business objectives can suddenly change.'

He adds: 'We also had to align the different parts of the Thames business - operational, new development, network services etc. We had to get them to tell us what they wanted, beyond just saying the 'highest quality at the lowest cost'.'

Thames also asked bidders a series of questions, with a particular emphasis on customer satisfaction and innovation. One 'well known' firm wrote back to Thames saying 'we've known you for 20 years, why are you bothering to ask us these questions'. They didn't get the job.

The team

The Thames/Morrison partnership employs 270 people. A 30 strong team takes care of management, planning and administration, with the bulk operational personnel.

The team is headed by a joint steering group. Thames provides the framework manager and oversees performance management, service performance and materials procurement (although this may soon move to the contractor). Morrison is responsible for service delivery, resource management and the supply chain. Quality, safety, planning and commercial management are handled jointly.

When the partnership was put together the prospective project team members were interviewed jointly by the senior Thames and Morrison executives to ensure that they could work in a partnering environment.

Morrison area director Adam Gosnold says: 'I couldn't believe the attitude some of the Thames staff had. They thought the way to manage contractors was simply to order them around.'

Initial attempts to put Morrison and Thames operatives, who had very different terms and conditions, together in single teams also initially met strong resistance. With the threat of union action looming, a series of meetings were held to tackle concerns head on. Problems eventually fizzled out.

The integrity of the project team has been strengthened by a series of 'quality days'. These take a diagonal slice through both organisations, bringing senior Morrison and Thames executives together with 'people who dig the holes', in an attempt to tease out innovation.

'Thames has become very process driven,' says Ford 'and people have come to realise that your performance depends on others in the supply chain and that you stand to benefit if you can build a good relationship with them regardless of who they work for.'

However Gosnold adds a note of caution: 'At the end of the day what we bring to the partnership is flexibility and because of that it is very difficult to get the real commitment from some of the operatives.'

Measuring performance

All the key performance indicators chosen are factual, not anecdotal, regularly repeatable and comparable. Many are attempts to turn regulatory requirements into measurable achievements.

The nature of the KPIs has also changed during the lifetime of the partnership.

'A few years ago you'd measure how many holes you dug,' says Ford. 'Now you worry about your customer service index'.

Even the way of calculating this index has changed. 'In the past we decided which questions we asked customers,' says Ford. 'Now we ask the customers what they think is important and get a market research firm to conduct surveys based on those views. For example, going without water is obviously high on people's list of concerns, but we didn't realise that not being told of any supply interruption was just as big an aggravation.'

Other KPIs in the partnerships include unit cost monitoring, job completion performance, streetworks noticing and quality compliance and safety levels. These are used to calculate a 'balanced scorecard' which produces an overall performance score.

KPI performance is publicised through a monthly performance pack, not only within the partnership's management, but to all operatives and throughout Thames.

Gosnold claims that performance measurement has been a key to enormous change throughout the partnership.

'When I first arrived here we were finishing 40%-50% of jobs in 48 hours,' he says. 'It was proposed we go for 90% and we thought they were having a laugh. We now do 99.6%. Without the awareness of targets, without the understanding of their impact on the business, you just don't make those sort of changes.'

Getting paid

Morrison has a schedule of rates for all the 400-odd kinds of work it carries out for Thames. Every month the cost of each job is calculated and compared against this schedule. The difference between the two sums produces the 'benefit' or 'profit', which is split between Morrison and Thames. The ratio of profit shared largely depends on which partner has contributed most to any particular saving.

Benefit to either partner is also dependent on performance against KPIs. As a result this creates a 'healthy tension' between the partners.

'If we're going to achieve our targets because of Thames,' says Gosnold, 'then we're on the phone getting high and mighty about what they're not delivering. On a conventional contract you'd just sit back and put in a claim.'

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